- GBP/USD Moves Above 1.25 as PM Returns
- Euro Awaits More News From Central Bank
- Shell Cuts Dividend for First Time in Decades
Forex markets moved toward the end of the week retaining some degree of the positive momentum which has seen them climb back from the ashes gradually. The Pound has been given heart by the return to office of British PM Boris Johnson, while the Euro prepares to move on an ECB announcement. Still nothing positive in the oil markets as the giant, Royal Dutch Shell moved to cut its dividend by 66%.
GBP Trading Upwards Despite Continued Lockdown
The Pound has found some degree of positivity as it continues to push beyond 1.25. This has been led by the return to office of leader Boris Johnson after his own serious encounter with the coronavirus. Despite the fact that he has announced his intention not to allow the country to emerge from lockdown, or begin easing restrictions yet, Sterling remains bullish.
That stance will hold for now, though the strength of the pair could be tested later in the day as the US release their updated unemployment data. Forex brokers could see a run back to the safe-haven dollar if these figures come out worse than the 3.5 million new individual claims that are expected to be filed.
ECB Holds Rates as Markets Wait
The EUR/USD market too remains poised forex traders have just from the ECB monetary policy meeting. This announcement was that the ECB will keep rates as they are for the moment, despite the union being in its most difficult crisis in many decades. The economy of the EU contracted 3.8% in the first quarter, the biggest drop since 1995 as many members struggled under the weight of the virus spread.
Despite standing firm on rates, President of the European Central Bank Christine Lagarde has previously stated that there are “no limits to our commitment to the Euro”. They did also reinforce the message that they are ready to buy up more bonds to assist the economies of the bloc.
With several countries now forging paths out of the lockdown, this may be seen by those forex trading on the market as a positive sign indicating a confidence from the ECB in the regions ability to bounce back.
Shell Makes Huge Cut to Dividend
The astounding drop in global oil prices has taken its toll. This is illustrated no better than with Royal Dutch Shell. They have made a massive cut to their dividend, the first such action since World War II. They dropped the payout by 66% to $0.16 per share acknowledging the difficult period of economic uncertainty.
This news may shake traders who see it as indicative of what the other major oil giants will do. Both Chevron, and Exxon Mobil results are due to be released on Friday and their actions will be closely watched for any similar reduction in the dividend paid to shareholders.
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